Hot Topics

More Lessons from Rosa Parks:
How Economic Self-Interest Trumped Racism (11/03/05)

The nation mourns the passing of Rosa Parks, whose dignity and quiet courage made her the image of the 20th century Civil Rights movement. She earned her place in history and in our regard by making a choice - to stay seated on a public bus in Montgomery, Alabama, when a white man demanded that she move.

Economics teaches us that people respond to incentives, that their choices can be explained in terms of the rewards and punishments they perceive to be associated with the alternatives they face. We also know that incentives are shaped by the rules of the game - the formal laws and informal norms of the societies in which we live.

How Hurricane Katrina Polished Wal-Mart's Image (10/18/05)

Don't Buy Those New Clothes Just Yet! (2/25/05)

If you upgraded your wardrobe over the holidays, you aren't going to be happy about the latest news from the clothing industry: Most retailers expect clothing prices to fall 20-30% this year. And those aren't sale prices or special promotions; they're permanent reductions.

Tsunami - The Economics of Natural Disasters (1/7/05)

What can economics teach us about how best to address the needs of survivors of this, and future, natural disasters? Fortunately, a great deal. Economics is, after all, the study of how we deal with scarcity - scarcity made starkly real by events like the Indian Ocean tsunami. The concepts and principles we learn in relative comfort are no less true in times of distress. Economics teaches us that the quality of people's lives depends, ultimately, on the production and distribution of goods and services. And like it or not, the laws of supply and demand that govern this process are as binding in times of crisis as they are in times of plenty.

More Market Magic: Futures Markets Predict the Presidency (10/26/04)

The magic of futures markets can be applied not just to the prices of commodities, but to almost any event, result, or outcome. Suppose, for example, that I offer you the following contract:

If Ralph Nader wins the popular vote in our state this November,
I will pay you a dollar.

Will you buy the contract from me? What if I offer a contract for a Kerry win? A Bush win?

The idea of using markets to predict political outcomes is more than theory. There actually is a futures market for the U.S. presidency, the Iowa Electronic Market, where $1 futures contracts are traded for a variety of sporting, entertainment, and political events. The IEM uses real money, so while it's fun, it's also a serious research investigation into the predictive power of markets.

After the Hurricane: How Much is Too Much? (10/4/04)

In a natural disaster, it's not just trees that go through the roof; so do the prices of necessities like water, plywood, ice, electric generators and, yes, tree removal services. Where's the good ol' magic of the market when you really need it?

Deficits 101 (6/11/04)

Just like clockwork, we can predict that every four years we’ll be bombarded by speeches, sound bites, and accusations about the federal government’s budget. The debate could be useful in setting our national priorities, but in the frenzied campaign atmosphere, it’s rare that opposing points of view are presented in a way that helps us formulate thoughtful opinions. And if you think the candidates’ positions are confusing, wait until the commentators weigh in! Confusing or not, the fact remains that the federal government’s budget – whether in deficit or surplus — affects our lives and it’s to our benefit to understand the debate. Starting with the basics gives us a foundation for sorting out the rhetoric, so let’s call this lesson “Deficits 101.”

The High Price of Oil (5/25/04)

Road Trip! The perfect graduation celebration, right? Wrong! Have you seen the price of gas lately? In dollar terms, the cost of filling a gas tank is at an historical high, and prices are rising daily. Definitely not good for summer travel plans. So, who's the villain in this sinister plot to make summer vacations more expensive?

Is Outsourcing Just A New Way of Doing International Trade? (4/10/04)

Hot Times or Bad Times—which way is the economy headed? (1/21/04)

In the Dark: What are the incentives to turn on the lights? (10/13/03)

Attacking Big Mac (5/5/2003)

How Should We Reach for the Stars? (2/28/2003)

The Dividend Debate (1/28/2003)

The Debate Over Airport Security—A National Exercise in Cost/Benefit Analysis (9/24/2002)

Money to Burn (11/26/2002)

Friction Over Steel Sets Off Trade War(4/22/2002)

Argentina Hopes for April (3/18/2002)

Should We Solve the Human Transplant Organ Shortage with Dollars? (2/1/2002)

Airplane Bailout - A $15 Billion Lease? (11/30/2001)

The Arctic National Wildlife Refuge: Many Alternatives and One Choice to Make (10/1/2001)

Tax Cut Legislation: What's Fair? (11/30/2001)

California's Energy Crisis (5/15/2001)

Where did all the money go?